It’s an important question, and if you’re not 100% sure about who will receive your superannuation balance and any other wealth you may have accumulated when you die, then it’s time to check your superannuation fund binding nomination, estate plan and powers of attorney.
Superannuation usually makes up a considerable percentage of an individual’s personal wealth, and because it’s generally considered retirement savings, super accounts are often set up and promptly forgotten about. In this article we draw your attention to THREE important super-related matters.
1: Beneficiaries & Binding Death Benefit Nominations
When you establish your superannuation account you should consider nominating beneficiaries and how much of your super money you want each to receive when you pass away.
For many young single adults, the nominated beneficiaries are often their mum and dad, split 50/50.
Then as life moves on, they change the beneficiaries to reflect their life situation. Commonly, changing to their spouse as the main beneficiary receiving 100% of their super proceeds, then later when children come along, the percentages may change. For example, 50% for their spouse and 25% for each of two children.
Binding death benefit nominations are important as it provides a formal instruction for your Super Fund Trustee when you’re no longer around.
Even though they may lapse after three years, and usually your super fund trustee will be in contact with you to update them, regularly reviewing and updating your beneficiaries and the details of the distribution of funds is important.
Getting married, having children, divorcing and re-partnering are all important life changes that need to be considered and applied to your super account.
This raises another point about keeping your contact details up to date.
Remember to let your fund know when you change your phone number, email or street address.
As financial advisers, we make sure we keep our clients’ super fund details current, but may we suggest you talk to your adult children about keeping these important super administration matters up to date.
2: Estate Planning
For many people, superannuation savings can make up a considerable percentage of their overall wealth. Importantly, how your superannuation fund is managed by trustees upon your death and the manner in which the money is distributed falls outside the wishes of your Will.
However, superannuation does form part of your estate and a well thought-through estate plan will consider how best to manage your superannuation money along with a range of other important wealth management matters following your death.
When it comes to estate planning, there are a range of scenarios we as financial planners work through with estate planning lawyers. These include the tax ramifications for beneficiaries which can include additional complexity when super funds are bequeathed to an individual who is not a dependant.
In this situation, say a parent intends to leave their super fund proceeds to their independent adult children, it may be prudent to move the money from the super fund to a saving account prior to the parent’s passing and in doing this can reduce the tax that would apply. Trying to solve the issue of super taxation when someone is on their deathbed is incredibly stressful, so for our clients, we discuss and implement appropriate strategies well in advance.
We also consider asset protection and the measures necessary for safeguarding super money, along with any other wealth or assets from unwelcome claims and for achieving the best possible outcomes for all involved.
3: Powers of Attorney
While planning how your superannuation is to be distributed and setting up appropriate wealth and tax structures such as trusts is all part of effective estate planning, so too is ensuring Powers of Attorney are in place.
This is imperative for enabling plans to be carried out and decisions made when you are no longer able to make those decisions for yourself.
Powers of Attorney, like Wills are important and need to be implemented, reviewed regularly and updated to reflect changing circumstances including who you want your Attorney to be.
To learn more about superannuation and particularly matters relating to downsizer rules appropriate for over 60s, please click this link.
We’re here to help you make the most of your superannuation, not only to help you grow your super balance but to implement tax effective wealth management and implement the important administration matters as described here. To learn more, please contact us on 07 3720 1299 or email admin@wealthfundamentals.com.au.
Lane Moses Pty Ltd ABN 56 092 186 117 trading as Wealth Fundamentals and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. Wealth Fundamentals strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances. This information is based on our understanding of legislation at the time of writing. Such legislation may be subject to change. This publication cannot be reproduced in any form without the express written consent of the author.